Security deposits for hire operators

[Risky55]

I hire out boats. The customer pays the hire fee by card on the day of the hire. I’m looking for the best way to protect my business in the event the customer damages my boat or loses some on-board equipment.

Currently I can’t properly check the boat until a couple of hours after the hire has ended and the customer has left. In the event that damage is discovered I contact the customer and a discussion takes place over my needing to charge him and how he’d like to pay. These are never easy discussions, and they can just refuse and hang up leaving the matter outstanding and me out of pocket. 

I’m looking for a better way to handle this. Option 1 is to charge a hire fee plus a security deposit at the outset, then refund all or some or no deposit at the end of the day after we’ve been able to properly check the boat. I think customers won’t like this. 

Option 2.  I’d prefer to have the ability to add a charge to the same card after the customer has left. He would authorise this by signing the hire agreement. This would need to be a Square feature so I don’t need to know the card number. 

Alternatively under Option 3 there’d be a way to charge the hire fee as normal at the start of the hire and to be able to nominate a maximum security deposit amount that gets checked to the customers card but not actually charged until I subsequently inform Square that the deposit amount is either cancelled (no damage found) or varied and charged (some damage found) or is to be fully charged (maximum damage charge due to damage found).

Option 4 could be to charge the hire fee as normal at the start but at the same time to record the card details on the hire agreement with the customer signing to acknowledge they approve a charge if damage is found at the end of the hire, which I’d do by manually entering and charging the card.

There may well be other options. 

I’m interested to know how other hire operators are protecting themselves, and so any feedback or even suggestions from Square are most welcome. 

Thanks. 

[Seamus]

Hey @Risky55,

Thanks for reaching out. As you've mentioned there are a few ways you could go about doing this. We're not able to facilitate pre-authorisations and the moment so option 3 is not available.

I strongly recommend something like options 2 and 4 here, where you have the customer sign an agreement. This way if there are any transaction disputes in the future (which can happen in scenarios such as this!) then you have paperwork to back up the agreement made with the customers.

Provided you have signed authority to do so, you use your customer directory to save credit card details on file then use Virtual Terminal or Invoices to remotely charge the card on file. Note that once entered into Square's system these card details are no longer viewable by you (though you will be able to see the last 4 digits of the number).

The most important thing to protect yourself here is having a pretty solid signed agreement. This won't stop potential disputed transactions from occurring, however it does mean that if a dispute were to occur, you'd maximise your chances of winning. Read more about disputes here and let me know if you have any questions!